She's On The Money - The Bank Of Mum & Dad

Episode Date: March 21, 2023

"The Bank Of Mum & Dad"  is a term we have been hearing about a lot more lately! But what does it mean and why is it on everyone’s lips at the moment? On today's episode we discuss BOMAD, its origins, impact on the economy and so much more. Acknowledgement of Country By Natarsha Bamblett aka Queen Acknowledgements. The advice shared on She's On The Money is general in nature and does not consider your individual circumstances. She's On The Money exists purely for educational purposes and should not be relied upon to make an investment or financial decision. If you do choose to buy a financial product, read the PDS, TMD and obtain appropriate financial advice tailored towards your needs.  Victoria Devine and She's On The Money are authorised representatives of Money Sherpa PTY LTD ABN - 321649 27708,  AFSL - 451289.See omnystudio.com/listener for privacy information.

Hello, my name is Natasha Nabanunga-Bamblett. I'm a proud Yorta Yorta, Kernai, Wolperi and Awadjeri woman. And before we get started on She's on the Money podcast, I would like to acknowledge the traditional custodians of the land of which this podcast is recorded on Awadjeri country, acknowledging the elders, the ancestors and the next generation coming through. As this podcast is about connecting, empowering, knowledge sharing and the storytelling of you to make a difference for today and lasting impact for tomorrow. Let's get into it. She's on the money.

She's on the money. hello and welcome to she's on the money the podcast for millennials who want financial freedom. Today, for a change, I'm joined by Victoria Devine. Is that how? Yeah, Devine. Thank you so much for joining me, Victoria. No worries. Thanks for having me. What are we talking about today? There's a term we've been hearing a lot of lately in the media, in everyday conversation. You guys have been messaging us. I think you know what I'm going to say. Yeah, inflation. It's not inflation. It is close, kind of. Not really. It's not even close. I can see what we're talking about. And you know what? That was a stab in the dark. What are we

talking about today, Bec? Today we're talking about the bank of mum and dad. I would like a bank of mum and dad. It would be so nice. Did you grow up with a bank of mum and dad? God, no. No, neither. You? No. No, no, no, no. I mean, in a small way, potentially, yes. And we'll get into that. But I don't think I have a bank of mum and dad in the way that people are assuming a bank of mum and dad. I more have the financial security of knowing that if I was ever up, you know, SH1T Creek without a paddle, my parents would come and do absolutely everything that they could. But yeah, no, I don't have parents that are going to give me a house deposit anytime soon. Sure. That is interesting. So there's like security of mum and dad?

I feel like there's lots of different levels and we'll get into that today. For sure. I guess what we'll start with is what is the bank of mum and dad? What does it mean? Why is everyone talking about it? Yeah, yeah, yeah. So as I said before, I think that there are a number of different levels of it and we'll talk about that. But the bank of mum and dad is quite literally just getting money from your parents instead of the bank. And obviously then each individual arrangement is very different, but they can look like lots of things, right? They can look like having access to money from your parents if you get into an emergency or you're in a bit of a pickle. It could be having less financial

anxiety because you aren't afraid to miss out on a shift at work because if you fall short, there's going to be some help there. You might be able to take on a really valuable unpaid internship, which is a different story because I don't think unpaid internships should exist, but you might have that privilege while at university because there's no pressure to support yourself 100% by working. Obviously, other specific support could also look like having an allowance from your parents or rent or having your bills or your car or any other type of expenses paid for. It could be literally anything. It could be your parents gifting you money for a house deposit or paying for holidays. Or I went to university with people where their

parents paid all their rent and all their bills until they graduated. And then they started paying for things if they got a job. It's one of those things that everybody's individual circumstances are really different. And I'm quite ambivalent about it. Like I don't actually care if you have a bank of mum and dad or not. But I think if you have that, we should be acknowledging that privilege and we should be talking about it because we keep throwing this term of the bank of mum and dad around as though it's a really big thing. It's because it actually is and we're going to talk about it. So when it comes to property ownership, we hear that term a lot, especially in the media, because I feel like you saw that article the other day where the dad in Sydney

got frustrated that his kid couldn't get accepted for a rental. So he bought him like a $3 million house. I can see that. That is unreal. I thought that was a Batuta advocate title. Yes. It wasn't. it was news.com and I was like, oh, okay, that's legit happening. It's just so far from my reality that I just thought it was a joke, but it could look like a lot of different things. Obviously, your parents buying a house for you all the way through to things like being a guarantor, where there's not actually an exchange of money, but your parents have assets that you can then rely on to get yourself ahead in life. It's not always a straight line of mum and dad have money and they gave it to you. Mum and dad might not actually have cash, but they have assets that

you can then rely on. So there's a lot to it. God, that must be so nice. It must be nice. Oh my gosh. The reality is that for many people, the bank of mum and dad or BOMAD. You've just come up with that, BOMAD. Do you want to, can we call it that? Yeah, that's a good word, BOMAD. It saves like a nanosecond. Yeah, okay, good. That's actually really efficient. This conversation has not been railroaded at all by that introduction. Yeah, BOMAD. But no, the reality is that a lot of people don't have access to BOMAD. But let's talk about some of the practical and mental health realities of this. Totally. And it can present in a number of different ways. So children who don't rely on the bank of mum and dad often have to prioritise work over other things such as social outings.

And I feel like you've probably got some really good experiences here, Bec, to share a little bit later. But they might also have to prioritise a solid paycheck over a learning opportunity that might put them into further debt. Like they might have to take out some more HECS loans and that might increase their prospects later on but they don't actually have that opportunity they might feel really guilty if they do need to ask for money or feel as though they're in debt for asking their parents for help and it's obviously tough too for parents who are willing to help but then can't and I think that needs to be addressed too because I think a lot of people put pressure on themselves if their parents and feel really awful that they can't then be that bank of mum and dad

like maybe their friends can be to their children and I just I don't think that's a judgment that anybody should carry on themselves. Like it is what it is and you shouldn't feel bad about it. At the end of the day, kids need love and that is it. But they'll often feel guilty if their child's struggling and they just don't have the opportunity to help, which would make anyone feel bad, right? Like you just want to swoop in and look after people. I know that would actually be really tough. I know that my mum struggled with that a fair bit. Growing up, I kind of had to pay rent very early on, which is like, no, you know, not a big deal. But I ended up kind of being in this vicious cycle of having to pay my way to live very young, not being able to go out and

study instead of work. So I tried to balance both from a young age, ended up just immediately in the workforce. Still to this day, I kind of, you know, I don't have any qualifications. I never really had time to, had to work full time immediately. And I feel like that's something a lot of people can relate to, but here I am and I'm happy about it. I feel like it, you know, it makes us all strong, resilient people having to kind of find your own way financially. I hope that doesn't sound silly. I don't think it sounds silly at all. I feel like there's a level of independence that comes from you as well that a lot of people would be envious of. Like you're so easy to just go, oh, I want to do this or I want to do that. And I think another thing that

a lot of people, you know, listening to this are going to go, oh yeah, I have bank of mum and dad, but there's a lot of guilt associated with it or it could actually transpire into financial control or, you know, you feel like you owe your parents for that. And I know that a lot of this sounds airy-fairy and like, oh, mum and dad just gave you some money, but that could actually be a motion of control. And we've seen that in our community before where parents are like, well, I give you money and I give you this life and I have made you and I've done this and you need to do these things for me. So it actually isn't always a good thing. We just want to talk about it a little bit more holistically. And I think, you know, cast a little bit more light on it because I feel like

if you have access to the bank of mum and dad, you don't usually talk about it. That's very true. It's been a stigma. But it is very large. Yeah. Like in Australia, it's massive. Yeah, absolutely. That actually brings me to my next point. How common is it in Australia? So, BOMAD, the Bank of Mum and Dad, was actually, in 2021, the ninth largest Australian lender. Isn't that wild? And we know that the top four banks obviously take out the first four positions, but the Bank of Mum and Dad dished out, get this, $34 billion in loans throughout the year, according to an analysis by the Researcher Digital Finance Analytics, or DFA. Isn't that wild?

That is so outrageous. But I was also talking to the team about this and like a couple of people on our team do have parents that, you know, have lent them money historically. And I was like, how did they measure that? And then I asked one of our team members, I was like, did your parents, like, would your parents ever like, you know, do a survey on that? No. So like $34 billion is massive, but that's what they tracked, not what's going in and out or the financial security that these parents are providing. And $34 billion is more than what actual lenders like the Bank of Queensland, HSBC, AMP, the Heritage Bank, Beyond Bank, and the Greater Bank actually currently

have in outstanding loans. What? Those are big banks. And it also found that 60% of first-time home buyers are getting financial help from their parents, with parents contributing an average of $92,000 in 2021, which is enough for a 20% deposit in most parts of Australia. Wowie. That's a lot of money. That is a lot of money. It is so much money. Yeah, I am curious about how they track that.

What is it like a shared spreadsheet that only rich parents use? Yeah, do you know how much money mum and dad were looking after me with at uni? Like when I was like, help, I need money for grocery. Like they're not tracking that stuff. I think this is just the official stuff. Yeah, okay. Maybe the property stuff, but obviously you only get what you get when you look at analysis. They don't give you absolutely everything, but it's one of those things.

And I was like, it has to be more than that. It has to be. It has to be. It has to be. Well, it seems like it is such a big thing. So why are we just hearing about it more lately? Because the world's getting more expensive, Bec. The world is getting more expensive.

We're talking about the rising cost of living. We're talking about, I feel like during periods of rising cost of living, which this isn't the first time the cost of living has increased. We have been through ebbs and flows and recessions before. But during that period of time, people are more likely to want to point out privilege. And this is a very good way of doing it. Talking about the bank of mum and dad is often not just a pragmatic thing of us being like, wow, here's how people get into their first homes. Here's how people finance their lives. As you can tell from the way the media is talking about it, there's a sense of entitlement. Like, oh, well, the bank of mum and dad will cover that. And like,

I don't think I've ever used personally, and this is probably not a good thing, but I've never used the term bank of mum and dad as a flippant term. It's always been like, oh, well, it might've been coming from the bank of mum and dad. If there was a question around, oh, I wonder how that person got into that $1.2 million house. I didn't realise they were saving a deposit kind of vibes. So I feel like there's a lot of judgment and it usually comes during times of stress. And obviously the property market is absolutely booming and home prices push ownership further out of reach for first home buyers. So we start going, well, how on earth are these other people who I thought were in the same position as me getting into that

property? And I think we just start talking about it more. It's not a new or a novel concept. Right. That makes sense. That makes sense. And I guess it kind of makes people feel better. Like if you can't get there yourself, don't worry. Maybe some people have a bit of a helping hand. Yeah, exactly. And I feel like it makes us genuinely feel better to know, okay, it's not just me struggling, everyone's struggling, but if they're doing well, I don't know. It's an interesting concept. And I had, I was actually doing a presentation yesterday. I do a lot of speaking engagements and I was at one and we were talking about tall poppy syndrome. Someone asked like, you know, how do you deal with that? What does that mean? How does that work? And I said,

it's interesting because the more successful you get, and I guess this really ties into the bank of mum and dad. People want to really support you when you're the same as them. We're on exactly the same page. But I find the more successful you get, the less people want to see you be successful because others, and this is such an Australian thing and I find it really gross, people want to see you do well, but they don't want to see you do better than them. And I find that so gross and that plays into this tall poppy Australia thing. And I feel like this is where the mum and dad thing comes in where you go, I want to see you do really well, Bec, but then if your parents went and bought you a house, I don't want to see that. That's rude. That's entitled, you

know, cut you down for that. I just think that's not the way the She's On The Money community acts. Like, I don't think any of us feel that way. No, we're not like that. But it's an interesting concept that I think in Australia, we talk a lot more about the bank of mum and dad than they would internationally because internationally cultures are different. Internationally, there are a lot of different cultures where it's actually expected your parents move in with you. It's actually expected that you provide for your, like there are just so many different ways of approaching money. But I genuinely feel like people want to see you do well, but they don't want to see you do better than them. Yeah, yeah, yeah. Or at least if you do well, people kind of want to see you

struggle to get there. It's so frustrating and it happens in every aspect of life, right? Whether you are at uni, people really want you to do well, but then if you go get a better job than them, they're not that impressed by it or they feel like that's some type of personal attack or, you know, even with She's All The Money. Like you see some people wanting us to do really well when we were tiny and struggling and I couldn't pay for episodes to be edited to now they're like, oh, they're terrible. They're so commercial. It's like, no, we're the same people doing the same things and we're just passionate about it. So it's an interesting concept. And I think the Australian tall poppy syndrome really plays into why maybe we are talking so much today about

the bank of mum and dad and the media gets on it so much because the Australian media in particular I think really love a good tall poppy syndrome story. Classic. Classic. I know you were just saying like you know in different cultures and stuff the I suppose like the dynamics are just different. Do you feel like this would maybe be a thing for you know in Britain for example like in England or? Yeah so in England there is a from my understanding a tall poppy syndrome thing going on to, but in America, it's not that prevalent. It's just the land of the great, the land of the free. Everyone wants to do well. It's an interesting concept. I don't think it's international, but I think also if you looked up the bank of mum and dad and wanted to see what type of

American media there is around that, I really don't think that there is much. It's a very Australian term. So interesting. I think it's a judgmental term too. I genuinely feel like it's quite judgmental like it as I said before like it's not coming from a place of love it's coming from a place of us trying to give reason to why that person might be doing well right because like the bank of mum and dad that term there's a real stigma to it right and they're doing that on purpose not like oh she bought her first home that's so beautiful yeah her mum and dad were so supportive like oh I'm so proud of her and her parents worked really hard and they must be so proud to see her get into her first home. Like they've worked hard all their lives. How good

is it that they can see their child, you know, being really successful too? That's not how we talk, is it? And Becca, I guess to take it a step further, we're not going, oh my gosh, that family's so smart. They've created this beautiful intergenerational wealth. You know, they're buying properties and really supporting their children, but they're not relying on commercial entities to do that. They're just being self-sufficient. Isn't that sexy? No one's saying that. They're saying it's entitled and intergenerational wealth is icky and disgusting and someone would have been compromised along that process. I just think it's so interesting because having come from a space where I worked with intergenerational wealth, so my experience

historically as a financial advisor before starting She's On The Money and before actually getting to work on my passion project was working with multi-million dollar families and even billion families and talking about family constitutions and how they would lend money to children to buy their properties or start their businesses. And it's really interesting seeing that dynamic because you get to sit in these meetings and I had no, like, I felt like a fly on the wall because that was so not my experience. Like if I needed to borrow 50 bucks from mum and dad, I felt a bit sick asking. And I'm not saying mum and dad didn't do well. I just, that was never something that made me feel good. Whereas these families are talking about, okay,

cool. My son is bringing me a business plan in a couple of weeks and he wants to start this brewery and it's going to cost $5 million. And I think that's a good investment. I'm like, far out. There are families having conversations like that. And again, no judgment. Like how cool is it that they can be self-sufficient and create this life that they want to create? Like imagine just waking up being like, you know what? I'll start a brewery. I'll just ask dad. What? What? That's low. I know. I know. Do you know what? I've always wanted to own a cafe. How about I just own a cafe? How about I just start a series of them because we've got the funding to do that? It's interesting as well. And I mean, to go on another tangent, it's one of those things where

I have always said from that experience that there are two really big differences between the wealthy and the not wealthy, and that's the wealthy have the ability to seize an opportunity. So, you know, if they saw something for sale that would create more wealth, they have the ability to seize it. But you or I might sit down, it might be a cafe, and I think that's a good example. You and I sit down and go, oh, well, that cafe's for sale. Far out. It would be a good buy. That cafe earns so much money. We do not have the opportunity to seize that. But then also, the networking connections, you and I would never know that that cafe was for sale to begin with. So it's, for me, the ability to seize an opportunity and the people that you are

surrounded by is often what, from my experience, differentiates the ultra high net wealth from even just the wealthy. And when you and I talk about wealthy, I'm saying, you know, you might become financially independent. You might have an investment portfolio that pays you an income, there's actually an entirely other level to that. And it's so interesting to learn more about it, right? And the cafe example, I think, is a very diluted down version of that. But you and I would never hear about the cafe because we're not the type of people that are in those circles to have those conversations. And even if we were, we'd be like, I don't know why I'm here because I can't afford to play here. But let's go back to the bank of mum and dad.

But I think that's an interesting, I guess, addition on what wealth looks like. Yeah, that's a really, really good way to look at it. And it's so true. Like I remember I was thinking the other day, like why, you know, right now we are trying to become financially free. And maybe if we have children one day, we would like to pass not money straight onto them, but the knowledge on, you know, how to better yourself and be, you know, financially free and all this kind of thing. That's what, I'm going to use this term very loosely, Nipo babies, parents done, not Nipo babies, parents done. And I really want that T-shirt that says Nepo baby. I'm not a Nepo baby. I know, that would be nice. I just feel like it might be nice to wear that T-shirt. I feel like I'm saying the word wrong too. Nepo.

Nepo. Nepo. I don't know. Yeah, no, I know what you mean. Nepotism. Nepotism. And their parents wanted that for them and they worked hard for that. And like, why has it got such a stigma?

Why is it such a negative term? Like someone somewhere worked very hard for this. A hundred percent. And I think that the stigma actually, you know, breaking this down and having this conversation now, I think it actually comes from this concept of hard work. Your mum worked hard, yeah? Like she probably worked harder than the average bear to put food on the table and look after you and like provide for you. So it's not actually that somebody worked really hard because everybody works really hard. Like, and I've said it before, you cannot budget your way out of poverty.

It's about education. It's about understanding. It's about access to resources. It's about, you know being educated to even know that you need to be educated to get to that next level so I think when we say oh someone worked really hard like taking it back your mum worked really hard and so did that person who has a 10 million dollar business but I guarantee you that person who has that 10 million dollar business might have had access to different resources and different information and different ways of working because you know you just don't know what you don't know and it's not just, oh, hey, here's this concept of compound interest and here's what superannuation is and here's why you should be saving. It's not that. It's access to opportunity. It's access to

those things that, you know, your mum didn't have that. No one sat her down and said, hey, did you know that if you did this, this and this and this, like your entire situation would change? But what she did was work her butt off. So now you're in the position to learn that. And that's beautiful and that's amazing. But I think that the judgment comes from people blaming it on hard work and then being like, no, but I work hard too. You do. You absolutely do. So I don't think we can say, oh, someone worked really hard for that. I think that's really good, but it really distills down the reality of the situation. They did, but there's a lot of privilege there as well. What opportunities did they have? What opportunities did they see that they knew to seize?

because there are opportunities that literally pass us every single day that we just don't see because we don't know that's an opportunity. Wow. I never even thought about like that. You make goosebumps me. Oh, my goodness. They just pass us by every day and you have absolutely no idea. It's like when someone invents something, you're like, oh, my gosh,

I've literally struggled with that issue for ages. Yeah. That opportunity to invent that existed before they thought about it, but they thought about it. What was their education? Where did that come from? it's even about thought processes right it's even you know going back to an episode we did earlier this year mindset being more optimistic instead of pessimistic having a mind frame of abundance

literally changes the way that you see opportunities so it's one of those things that yeah let's get back on track but I think that that's worth calling out because it's not just hard work yeah perfect yeah I feel like we need to really absorb everything how about we go for a really quick break. I need a cup of tea after that. Yeah, I think a cup of tea might be nice. Let's go do that. Welcome back. Thank you. Was it nice? No, I didn't get a tea. I'm going to get right to that. I don't want to ruin the magic for people, but it was a fake break for us when we're recording. Yeah, like we say break and then they put the ad in so that I can pay you and I can pay the rest of the team. But yeah, I sat here for three seconds and then we started recording again.

Wow. Everything's our secret now. But after this episode is recorded, I will be getting a cup of tea in between. We're recording another episode after this. I hope so. I hope you get that tea eventually. I'll get you a tea too. I'm really good at tea. Now, Vee, we were talking about the bank of mum and dad. We are. You're talking about like the undercurrents and how it's kind of like secretly, you know. Yeah. It's not just hard work.

It's not just hard work. There are many aspects and elements to this. So I imagine that the true nature and impact of bank of mum and dad would be hard to measure though yeah that's why i was talking about that stat earlier when we said that bomad had dished out what was it 34 billion dollars i was like but how do you measure that like there are so many families that would not talk about that right like and to go back to my wealth days and when i used to work we worked with this client and he was really beautiful and like he was just one of the kindest human beings in the entire world had six kids that's not actually true he didn't have six but I don't want you to be able to pinpoint this individual. So I'm trying to change it.

But he had a lot of kids, right? And he spent most of his time not in Australia because he had international companies that he ran, had a family here. His family didn't know that he was a billionaire. So we ran his family wealth division. We talked about what he wanted from his wealth, what he wanted for his kids. His kids obviously knew that dad did well. He did all of these things. But dad also owned a whole heap of companies and really like parts of really big companies that if I talked to you about them, you'd be like, I know that. I know this. That makes sense. Yeah. Wow. Far out. That is big dog stuff. His kids didn't know that. And it got to a point where his kids were at university and a few of them were, you know, at that stage where they

were talking about what their jobs would be next. And he kind of had realized he wanted to extend the opportunity for his kids to potentially either run some of those businesses or be involved in those businesses because they were kind of family businesses and epic opportunities. But how do you bring that up? How do you go, hey, so I've been trying to keep you humble for a little while and actually we're billionaires. So if you don't want to work, you don't actually have to. I just really wanted to teach you to be humble and self-sufficient. That's actually a conversation that ended up happening where, you know, they knew mum and dad were doing very well. Like, I mean, you don't accidentally own as many homes as they do and you don't accidentally go to the

best schools in the country and all of that other stuff. So they knew that they were privileged, but I don't think they knew to the extent. But what I do know for sure is that person never, ever, ever would have ever consented to doing a survey about wealth and how much that they had or how much that they shared. Absolutely not. Yeah, that makes sense. Also, I think you've narrowed it down i know exactly who you're talking about yeah good good just kidding i don't i don't it wasn't even a male it sucks to be you oh my gosh that was the internalized misogyny in me i said he i said he i said he oh good okay it wasn't the internalized misogyny then but did i just make that potter oh gosh wow this is just but you're right you're right let's get back on

track okay because you're right the true nature and impact of boomad i just don't believe can be measured because in those circumstances, especially in high net wealth families, they're not going to share it. It's interesting because you see those lists come out on Forbes, like the Forbes rich list, which side note, I got a message from a family member ages ago when I made the Forbes 30 under 30. And that was like, thank you. It was 2021. And it was like the highlight of my entire life. But they didn't know the difference between Forbes 30 under 30, which is like, you know, people crushing it in their careers, not necessarily rich. and the Forbes rich list? And they thought that I'd made the rich list. And I was like,

no, but thank you for assuming and believing that maybe I could have. It's like the opposite of that conversation of telling someone you've been secretly rich. Now you have to tell your family I'm actually secretly poor. But the Forbes rich list, right, like lists the richest people in the world. And I remember seeing the Australian Forbes rich list and going through it and being like, cool, I've got clients richer than them. Cool. Got clients, met people richer than them. That's what's visible. That's when people are very happy to share their net wealth or their net wealth is so obvious that, you know, you could work out, okay, they own this big listed company that's worth X. Therefore, they're probably

worth a minimum of $10 million. And plus, oh, we know that they have, you know, family beach house in Portsea. We know we can just Google that. That's worth $7 million. Like, do you know what I mean? So some people's wealth is really obvious and you can put them on a rich list and we can talk about the richest man in Australia. And you don't actually know who the richest man in Australia is because wealth can be very secretive. And with the right structures, you will not find it. Like you will not be able to say who is worth what and when and where. Insane, right? Yeah. Like when you start talking about stuff like that, you're like, wait, I thought that was the

rich list and it is what it is. No, that's not how it works. Wow. Wow. Wow. A lot of modest people out there. A hundred percent. And that's why we can never judge anybody. No, yeah. And you shouldn't. I guess we kind of, you just kind of went over this, but do you know if there are any studies or metrics available for how it kind of impacts the property market and first home ownership? Yeah. Look, I did a little bit of research and I'm obviously very jaded by my experience to be like, that's not everything. So there was actually a research article published

last year by a couple of economists from the Curtin University and also from the California Center for Population Research and it found out a few interesting things and I've dot pointed them here to read them out to you today, Bec. Thank you. So first things first, it found out that living in a rent-free home led to a threefold increase in the chance of entering home ownership compared to someone in the private rental market trying to save up a deposit. Checks out. Story checks out, but like that's actual research. I like that. Using data from the longest running longitudinal study of Australian households, the Household Income and Labour Dynamics in Australia or the HILDA survey, which I've spoken about a couple of times on the pod, the researchers were

able to isolate just over 8,000 instances of survey respondents moving from non-home ownership to home ownership in any year. They then looked at the parental assistance received by these homeowners and the role it played in increasing their chances of making the transition compared to someone else with the same characteristics who didn't buy property and interestingly they found that only a small proportion 4.5 percent of successful first home buyers received an outright cash transfer of more than five thousand dollars from their parents around the time of their home purchase so that's less than what i thought but that doesn't include like that's actual cash remember how i said that you don't have to just get money from your parents you can also have a

guarantor and just lean on their assets. That doesn't take that into consideration. A further 2.6, however, benefited from an inheritance around that time. Not many, which actually is really good. Inheritance is a thing that I don't think is a blessing, can change your life, but I would prefer to have the person there. While 74% of first home buyers lived in private rentals before their purchase, 13.4% had been co-residing with their parents. It's just kind of interesting. A further 4.5% had been living in rent-free dwellings provided by family or friends,

like an investment property or a holiday home. It must be nice. It must be nice. And the remaining first homebuyers had either been renting in public housing or living rent-free in homes provided by non-family members or friends. And interestingly, in-kind transfers like these from parents or family members to aspiring buyers were found by the researchers to play a critical role in helping them into the market.

Really? So they wouldn't have been able to do it without them. Yeah, okay. Interesting, right? Very interesting. Interesting, right, but also I just feel like the HILDA study doesn't take into consideration guarantors because distilling it back down again, talking about smart financial decisions, if hypothetically, Bec,

I'm your mother. I wish. It might be nice. I'll adopt you. It's fine. But if hypothetically I'm your mum and you and I sit down and go, all right, Bec, you want to buy a house and I have $100,000 in my bank account and I also own some property and you say, all right, Victoria, I really want to buy a house. I need $50,000 as a deposit.

It is a smarter financial decision for me as your mum to let you put a guarantor on my home as opposed to giving you the $50,000 in cash, even though I've got it. So it makes more financial sense for me to hold on to cash because obviously cash can help me pay off the loan that I might have on that property. It can give me a bit more financial security. I could invest it. And we know that the average return of the Australian share market's just over 9%. So that's actually a better choice in this moment, in this very, very simple example for me to give you a part of equity that doesn't actually impact my financial circumstances. All it does is put a caveat over that property to say, okay, well, Bex, you know, using some of

that equity to buy a home because they're not out that cash. So to me, it makes sense that the HILDA study is showing that there's actually a low amount of people that have cash being transferred to them because if your parents can actually afford cash and just shot in the dark, they probably also have some assets that you could rely on. And I'd really like to see those statistics, but they're not there. And they're also probably very financially savvy. So they know that that's the better choice. Yeah, exactly. And like if you go to a mortgage broker as well, they'll help you through that. If you're at a point where you're like, hey, V, I know we're talking about our BOMAD, but I'd actually like to make use of BOMAD, talk to a broker. Go talk

to Kate from Zella Money and she can actually help you through that one. How do you talk to your parents? What does that look like? What are the best options? Because sometimes your parents will be like, oh, Bec, I actually have some cash saved. I'd love to be able to help. And they actually haven't thought about the implications of that. And it might actually be better to get a guarantor as well because of your parents. And again, another example, we had a client whose parents were like, oh, we really want to help. We've got some savings that, you know, we've been putting aside for you. It's like 20 grand to go towards a house deposit. Keep your cash. Can I actually just have that guarantor? Because that way it was a guarantor

of about $100,000. They got immediately into the property and everyone was actually in a better financial position. So it's definitely worth talking to a good broker about that because sometimes your parents are like, oh, here's this cash. Like that's really sexy. We've tried really hard. Yeah, you have, but there's actually a better outcome for literally everybody in this circumstance. Interesting. Very interesting. So from where I'm sitting, it looks like there are only benefits to having a bank of mum and dad. No, that's not true. Let's get into some of the cons. Yeah, if we didn't talk about the cons, I guarantee my DMs would absolutely blow up with people being like, it's not all sunshine and roses. And I get that. I totally get that.

there's a lot of upside. But in this position, there's also a lot of downside. And we covered a few of them at the very start of this episode when I talked about financial control. But obviously, having financial control was one of them that I mentioned really early on. But also having a bank of mum and dad actually can delay your financial literacy until later in life when you're forced to learn instead of learning along the way. Because why would you learn how to budget? And why would you learn how to do cash flow if mum and dad are just giving you cash? To be honest, If my parents did that, I wouldn't be interested in budgeting either. No, that's true.

Why would I? If my dad could just step up, get a job where he can get a black Amex and then give me a copy so I have unlimited funds, I don't need a budget. Is it that hard? Is it too much to ask? Dad. Apparently it is. Apparently it is. But it can delay financial literacy, which is obviously going to put you backwards.

people who grow up with the support from their parents can actually often be a little bit more reckless with their spending as they know that they have their parents to fall back on so for example they might view their parents as their emergency fund and never build one up themselves or and it's a very privileged position to be in right beck or they might just go oh there's five grand in my account that can be a europe trip yeah great like they're not thinking about the future they're not thinking about wealth creation whereas somebody who doesn't have that to fall back on is not going to make that decision. Like I guarantee today, if you had five grand in your bank account, you're going, I'm going to blow it on and just a holiday in general, it wouldn't

happen, would it? Probably not. No, no. So it's one of those things where you are a little bit more reckless. Again, not judgmental. No. Just a fact. It actually eats into parents' retirement savings. So parents can actually be overly generous. I think we need to be really aware that the bank of mum and dad, while it can be really sexy, you don't actually know their financial position. Your parents might just be being super generous because they love you so much and it might actually be negative financially for them. So I think it's also really responsible to go, okay, well, where is this coming from? How does this work? And actually step up and be an adult and learn a little bit about financial literacy. I'm not saying don't do it if that's

your family life, because you know what? Again, there are heaps of cultures where their parents are like, no, you will take my money or offend me greatly. I want to be adopted by them. If you're going to adopt me, let me know. I'm putting my hand up. Exactly. And if the relationship sours amongst your family, things get really pickly, really quickly. And obviously we're not talking about things like financial abuse and financial control, all of which are really important to take into consideration there too. And I think that people don't see that as abuse because they're in quote well-off situations, but it is like if your parents give you money and then lord something over you that is actually abuse yeah so that's

really shitty to learn and I think that a lot of people would be like I need to be grateful and like we've heard it before there was a money diary I think in 2021 or very very early 2022 where we spoke to somebody who was in a financially abusive relationship and we'll find that and put that actually in the show notes because I think it's a really good listen off the back of this where she really didn't feel like she could reach out to her family or friends because she had this really big house in this really fancy area and you know she had everything she could ever want but her mum was financially abusive and lauded that over her and it really ate into her mental health and she's still in therapy for that and trying to get through that and like even though mum is now worth

millions she now doesn't have the education she wants because like she just didn't go out and get the education she wanted and it's an interesting story that I think really plays into it because I think if I said to you, name a financially abusive relationship and go, you'd be like a husband and wife immediately instead of thinking, okay, cool. It could be a mom. It could be a dad. It could be, you know, a child abusing an elder. It could be so many different things. And I think we really need to open that part of the conversation up as well, because as much as you're right, BOMAD sounds so sexy, like the bank of mom and dad. I would love to have stupidly rich parents great 10 out of 10 because I know that they're being so much less stressed like

imagine if your mum was real rich I know I want that for everybody I'm actually hoping that she sits me down one day and says I've been secretly a billionaire your whole life yeah right I've been teaching you Bec to just be humble I've been giving you life experience I have been making you the best person ever don't worry about it now oh my gosh wouldn't that be nice can somebody What took you so long? Do you know what? If that is your money story and you had a parent turn around at some point and said, actually, we've been teaching you to be humble for a really long time,

please slide into my DMs and we know that story so much because it's just a pipe dream for us. That would be so fun to listen to. It's a pipe dream. All right. Well, I think that's all we have time for today. Bec, what do you reckon? I reckon let's get out of here.

Let's make that tea once and for all. Oh, my gosh. Yes. All right. I hope there's oat milk in the fridge in this office. Otherwise, I'm going to riot. She's going to run. All right.

see you guys on Friday. Have a good week. The advice shared on She's on the Money is general in nature and does not consider your individual circumstances. She's on the Money exists purely for educational purposes and should not be relied upon to make an investment or financial decision. If you do choose to buy a financial product, read the PDS, TMD and obtain appropriate financial advice tailored towards your needs. Victoria Devine and She's on the Money are authorised representatives of MoneySherpa PTY LTD ABN 321 649 27708 AFSL 451 289.